Yash Highvoltage Ltd. is emerging as a significant player in India's power engineering industry, specializing in high voltage and high current Transformer Bushings. The company's products are recognized for their innovation and long-lasting performance, making it a key supplier for utilities and industrial markets worldwide.

Company Overview:

Yash Highvoltage has carved out a strong position in the transformer bushing market, serving both Indian and global clients. The company's products are known for their reliability and advanced engineering, particularly in the production of Resin Impregnated Paper (RIP) and Resin Impregnated Synthetic (RIS) transformer condenser bushings. Over the years, Yash Highvoltage has earned a reputation for offering high-quality and innovative solutions, essential for power transmission and distribution infrastructure.

The company is led by Mr. Keyur Girishchandra Shah, a seasoned promoter with extensive experience in the power engineering sector. His leadership has guided the company to its current status as a trusted supplier of critical electrical components.

IPO Details:

The Yash Highvoltage IPO, a Book Built Issue, aims to raise ₹110.00 crores, consisting of:

• Fresh Issue: 64.05 lakh shares worth ₹93.51 crores.
• Offer for Sale: 11.30 lakh shares totaling ₹16.49 crores.

The subscription period for the IPO opens on December 12, 2024, and closes on December 16, 2024. Allotment is expected to be finalized on December 17, 2024, and shares will be listed on BSE and NSE by December 19, 2024.

The price band for the IPO has been set at ₹138 to ₹146 per share. At the upper price band of ₹146 per share, the market capitalization of Yash Highvoltage will be ₹416.84 crores. The lot size is 1,000 shares, with a minimum retail investment requirement of ₹1,46,000. For High-Net-Worth Individuals (HNIs), the minimum investment is 2 lots (2,000 shares), which amounts to ₹2,92,000.

Grey Market Premium (GMP):

As of December 11, 2024, the GMP for the Yash Highvoltage IPO stands at ₹107, indicating a potential listing gain of 73.63%. This shows strong demand for the shares in the grey market ahead of the listing, signaling positive investor sentiment. However, it’s important to note that the GMP is driven by demand-supply dynamics in the unorganized market and does not guarantee actual listing price movements.

Subscription Status:

As of December 13, 2024, the IPO has already been subscribed 5.28 times on the second day of the subscription period, indicating strong investor interest. This suggests a healthy demand for the company’s shares, especially considering its solid performance and growth potential in the power engineering sector.

Objectives of the IPO:

The funds raised through the IPO will be primarily utilized for the following:

1. Setting up a new factory for manufacturing RIP and RIS transformer condenser bushings, which are critical components in the power transmission sector.
2. General corporate purposes, supporting the company's continued growth and operational expansion.

Financial Performance:

Yash Highvoltage's financials highlight its growth trajectory:

• Revenues from Operations have grown from ₹6,537.90 lakh in FY2022 to ₹10,912.25 lakh in FY2023.
• EBITDA has consistently increased, from ₹1,483.35 lakh in FY2022 to ₹2,079.25 lakh in FY2023.
• Profit After Tax for FY2023 was ₹1,206.27 lakh, a significant increase from ₹871.23 lakh in FY2022.

For the FY24 period ended June 30, 2024, the company reported revenues of ₹2,777.84 lakh and a PAT of ₹312.75 lakh, showcasing strong operational growth.

Valuation and Recommendation:

The Yash Highvoltage IPO is being issued at a pre-issue P/E ratio of 26.79x, which is significantly lower than the industry average of 194x. Post-issue, the P/E ratio increases to 34.56x. This indicates that the IPO is reasonably priced relative to its growth potential and the industry.

Additionally, with a Return on Capital Employed (ROCE) of 44.07% and a Return on Equity (RoE) of 32.51% for FY24, the company shows strong profitability and capital efficiency.

Given the company's consistent growth, strong management, and favorable market conditions, the Yash Highvoltage IPO appears to be an attractive investment for both listing gains and long-term potential.

Conclusion:

The Yash Highvoltage IPO offers a compelling opportunity for investors looking to capitalize on the growth of India's power engineering sector. With solid financials, a strong IPO GMP, and a reasonably priced valuation, we recommend applying for the IPO for both listing gains and long-term investment. However, investors should be mindful of the risks associated with the grey market premium and IPO dynamics.